First Mover Asia: Bitcoin dominates but altcoins lurk
|Although Terra's collapse has raised existential questions about the future of DeFi, some traders appear to be preparing for a return to altcoins; BTC remains rangebound below $30,000 in Tuesday trading.
Good morning. Here’s what’s happening:
Prices: Bitcoin rises but remains below $30,000.
Insights: Bitcoin dominance is at an on-year high, but traders are preparing another alt-season.
Prices
Ether (ETH): $1,978 +0.4%
Ether (ETH): $1,978 +0.4%
Biggest Gainers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Ethereum Classic | ETC | +12.8% | Smart Contract Platform |
| Filecoin | FIL | +5.2% | Computing |
| EOS | EOS | +4.7% | Smart Contract Platform |
Biggest Losers
There are no losers in CoinDesk 20 today.
Bitcoin wasn't going anywhere fast late Tuesday.
The largest cryptocurrency was up slightly but still trading below $30,000 and about midway in the two thousand dollar range that it's occupied for almost two weeks since the crash of the UST stablecoin. Other major cryptos also rallied late to hit green, albeit not by much, as investors gripped tightly to their risk-averse bearishness.
Near the time of publication, bitcoin was trading at about $29,700, a 2% gain. Ether, the second largest crypto by market cap, was recently up less than a percentage point, while XRP, SOL and the meme coin SHIB each rose over 1%. Bitcoin's price has dropped for eight consecutive weeks.
"Bitcoin is in the danger zone as sentiment for risky assets have fallen off a cliff," Oanda Senior Market Analyst The Americas Edward Moya wrote.
Macroeconomic news offered little encouragement for investors.
Snap shares declined over 40% from their Monday close after the company said its revenue and profit would miss earlier projections for its second quarter, a victim of inflationary pressures and macroeconomic turmoil. According to The Wall Street Journal, the company's CEO, Evan Spiegel, said in a presentation prior to the warning that he had asked managers to look for cost savings. Tech giants Meta (FB) and Google (GOOG) dropped about 7% and 5% respectively
The housing report reflected the impact of rising mortgage rates on would-be home buyers who are now priced out of loans they might have afforded when borrowing costs were lower earlier in the year. Meanwhile, the manufacturing and service purchasing managers index dropped to three- and four-month lows, primarily victims of rising prices.
In the smallest sliver of good news, the bitcoin Fear & Greed Index, which has been stuck in "fear" zone over the past month and reached its second-lowest recorded fear level in the index's history last week, has improved slightly the past few days, suggesting bearish sentiment could diminish, particularly if bitcoin crosses $30,000.
But Oanda's Moya noted that even falling Treasury yields, "which makes crypto attractive," have failed to move investors. "Right now, no one wants to buy this dip," he wrote, adding that bitcoin could test support just above $25,000 and that $20,000 remains a possibility. "Bitcoin can't stabilize until Wall Street sees calm and that might not happen for a little while longer."
In the smallest sliver of good news, the bitcoin Fear & Greed Index, which has been stuck in "fear" zone over the past month and reached its second-lowest recorded fear level in the index's history last week, has improved slightly the past few days, suggesting bearish sentiment could diminish, particularly if bitcoin crosses $30,000.
Markets
Gold: 1,866 +0.6%
DJIA: 31,928 +0.1%
Bitcoin Dominance is at an on-year high, but traders are preparing for another alt-season
As bitcoin continues to trade comfortably within the $30,000 range, data shows the cryptocurrency’s dominance of the digital asset market has shot upward and is now just under 45% of total market capitalization, a high for the year.
Insights
Bitcoin’s dominance of the broader crypto market cap reflects traders’ risk tolerance and market sentiment. When conditions turn bullish, traders move capital into Ethereum and other layer 1, or base, blockchains in order to take advantage of the decentralized finance (DeFi) market. Likewise, a bearish market brings back traders into the safe haven of bitcoin, crypto’s "digital gold."
With the implosion of the Terra ecosystem, many layer 1s have been hit hard: Solana is down 50% during the last month, Avalanche is down 60% during the same period, and Polygon lost just over 53% of its value.
Bitcoin dominance chart (TradingView)
According to CoinGlass, funding rates for ether and major alts are working in the favor of long traders. Funding rates are turning negative, which means that short sellers are being liquidated in favor of those with long positions.
With the implosion of the Terra ecosystem, many layer 1s have been hit hard: Solana is down 50% during the last month, Avalanche is down 60% during the same period, and Polygon lost just over 53% of its value.
There’s still a long way to go before we can declare another season of the alts, despite a few green sprouts. The total value locked into DeFi protocols, the vehicle in which many alts are used, doesn’t show any signs of improvement.
DeFiLlama has the total locked-in value at $111 billion, down from around $205 billion at the start of the month, before Terra’s planetary collapse, and well below the $250 billion in DeFi in December of last year.
CoinGlass data on funding rates (CoinGlass)
Likewise, the ratio of long positions to short has moved in favor of longs for ether, DOT and SOL as per CoinGlass’ data.
DeFiLlama has the total locked-in value at $111 billion, down from around $205 billion at the start of the month, before Terra’s planetary collapse, and well below the $250 billion in DeFi in December of last year.
Bitcoin (BTC) continues to trade in a tight range, struggling to make a decisive break above or below $30,000. The cryptocurrency found support around $27,500, which has stabilized price action over the past week.
Technician's take
Momentum signals are improving on the daily chart, but remain negative on the weekly and monthly charts. That could increase the risk of a breakdown in price, similar to what occurred in earlier this month.
Important events
Sending Decentralized Data Storage to Space, Buying Land in the Metaverse
Marta Belcher of Filecoin Foundation explained how her organization is teaming up with Lockheed Martin (LMT) to explore sending blockchain data to space. Plus, Josh Olszewicz of Valkyrie provided insights on crypto markets and Sam Hamilton of Decentraland Foundation discussed virtual land.
Nvidia second-quarter earnings
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.